Stratfor Global Intelligence
Sept. 27, 2013
Chinese President Xi Jinping’s tour of four Central Asian countries in early September highlighted a trend we’re following closely at Stratfor: China’s struggle to reduce its exposure to security risks and supply disruptions in the South and East China seas by exploring new overland sources of and transport routes for goods, energy and other natural resources.
Over the past fifteen years, the Chinese economy’s extraordinary growth has turned it into the world’s largest importer of key industrial inputs like coal, iron ore, copper, nickel and aluminum, as well as the second-largest importer of crude oil after the U.S. Today, more than 85 percent of Chinese trade moves by sea, and more than 80 percent of its energy imports are seaborne. This leaves China perilously dependent on the safety and security of sea lanes, which serve as highways not only for getting Chinese-manufactured goods out to consumers in the U.S., Europe and elsewhere, but also and increasingly for bringing in the raw materials that China can no longer wholly supply for itself.
The Chinese government’s growing anxiety over the security implications of this double-sided dependency has taken many forms. Aggressive naval modernization, the speedy expansion of Chinese energy and resource acquisitions overseas, and the general push to raise China’s diplomatic profile abroad are some of the Communist Party’s most visible efforts to cope with the geopolitical implications of the country’s globe-spanning economic needs. But in recent years another, somewhat less overt, strategy for mitigating the impact of overseas supply disruptions has begun to take shape — in the form of rapidly expanding investments into energy projects in Central Asia and transport ties linking the Chinese interior through South and Central Asia on to Europe and the Indian Ocean Basin.
The keystone for this process is the Xinjiang Autonomous Region in far northwest China. Xinjiang contains China’s entire 3,700 kilometer-long border with Central Asia, making it the only viable direct land bridge between the Han Chinese core provinces and the rest of southern Eurasia. It also contains the Karakoram Pass, China’s only overland route to Pakistan — and, in turn, to the Chinese-operated Port of Gwadar. These facts of geography help explain Xinjiang’s historical legacy as home to the fabled Silk Road trading routes, as well as the strong ethnic, cultural and religious ties that continue to bind Xinjiang’s Uighur ethnic majority to the Turkic communities of Central Asia and beyond. Today, China’s leaders are actively reviving these legacies, as seen in Xi Jinping’s recent call for a new “Silk Road Economic Zone” spanning Xinjiang and its Central Asian neighbors.
Energy is the beating heart of China’s interests in Central Asia, and by extension in Xinjiang. In 2012, China imported 21.3 billion cubic meters of natural gas from Turkmenistan — more than half its total natural gas imports that year — and by 2020 that number could jump to almost 65 billion cubic meters. Likewise, Chinese imports of oil from Kazakhstan are set to grow dramatically in the coming years, potentially reaching 1.5 million barrels per day, as output from the Kashagan oil project rises. China is also working on oil and metals projects in Afghanistan, has agreed to import up to 10 billion cubic meters of natural gas from Uzbekistan, and is all the while rapidly transforming Xinjiang itself into a key resource base for newly industrializing provinces in the Chinese interior.
However, China’s ambitions in Central Asia face many constraints. Distance and terrain pose enormous cost and logistical challenges to large-scale trans-Eurasian transport, while a perennially unsteady security situation in virtually every part of the Central Asia region — including Xinjiang — will threaten Beijing’s dream of reducing its exposure to energy and resource supply disruptions. Nonetheless, as long as China’s energy needs continue to grow, the Party will be forced to explore such avenues in order to ensure energy, economic and political security, for both the country and the regime.